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Business fear ruin from Queensland Nickel Claims

This was the headline in a recent Courier Mail article that should strike fear into the heart of every small business owner. Why? Because it refers to Clive Palmers company Queensland Nickel (QN) that has been grabbing headlines for all the wrong reasons over the last two years. As it currently stands, liquidators are chasing millions of dollars in payments that were made to suppliers and service providers to QN in the months leading up to the collapse. There are some creditors being pursued for amounts in excess of $100,000, which is a massive hit for any business to take!

Liquidators are obligated to recover funds for creditors where possible. Under the Corporations Act, payments made to creditors up to six months before their appointment can be recovered as â€œunfair preferential paymentsâ€. It is usually bad enough when a client you have been dealing with goes under owing you thousands of dollars. But, what can be even worse is if a Liquidator has the ability to recover money from you that you have already been paid and likely reinvested into your business! This happens more often than most people realise.

So imagine your biggest client falls over tomorrow. What is the client worth to you in revenue each month? Now, multiply that figure by a factor of six. Whatever amount you come up with, ask yourself the serious question, â€œcan I afford to take a hit that big if a Liquidator comes knocking?â€ Yes, it is worst case scenario, but even if it isn't your biggest client, even a mid-sized client falling over can be enough to send a small business over the edge. Do you really want to run the risk and test out the theory?

The ATO and the Federal Government have been leading the push for companies to be wound up in recent times. The very latest news out of Townsville now has the local mayor campaigning for the Corporations Act to be changed to protect business from such scenarios. Any change to such legislation is far from guaranteed and would be many years off from being implemented even if it did occur. And that is a big â€œifâ€.

But what a lot of people don't realise is that the legislation already exists to protect small business from such scenarios. Under the Corporations Act, liquidators only have the ability to pursue a preference payment from an â€œunsecured creditorâ€. Secured creditors have automatic immunity. How do you become a secured creditor? A simple registration on the PPS Register (www.ppsr.gov.au) over your client gives you secured creditor status. It lasts for up to seven years and provides automatic peace of mind in the event a worst case insolvency scenario unfolds.

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There sure are a lot of slow payers out there thank goodness for EC.

1

Using the on-line services is fantastic. I can print reports and check the status of my debts easily and quickly.

1

We would like to express our sincere thanks to EC Credit Control. We had a debt that was of a considerable amount to any small business but with the help of EC Credit Control we are very happy to say the full amount has been recovered.

1

EC Credit Control provided us with great support and communication throughout the entire process. It was a relief to know that we had professional people to help and recovery the debt on our behalf.

What our Clients Say

EC Credit Control provided us with great support and communication throughout the entire process. It was a relief to know that we had professional people to help and recovery the debt on our behalf.

1

There sure are a lot of slow payers out there thank goodness for EC.

1

Using the on-line services is fantastic. I can print reports and check the status of my debts easily and quickly.

1

We would like to express our sincere thanks to EC Credit Control. We had a debt that was of a considerable amount to any small business but with the help of EC Credit Control we are very happy to say the full amount has been recovered.